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The Undercover Economist On Fraud, Error and Debt

On his blog The Undercover Economist also known as English economist and journalist Tim Harford comments on the just released Behavioural Insights Team  paper on fraud, error and debt.

According to Harford, the paper contains neither rocket science nor brain surgery. Nonetheless, he pragmatically recognizes the behavioural potential by highlighting one of the paper’s randomized trials:

“Let’s say somebody has been fined in court but has not paid. You could send in the bailiffs. Or you could send a text message explaining that if the fine isn’t paid quickly, the bailiffs will be on their way. The Behavioural Insight team and the courts service ran a randomised trial, sending no text message to some people and a variety of text messages to others to see which approach works best. It turns out that text messages are highly effective and even more effective is a text message that mentions the miscreant’s name. The difference between no message and a personalised message is that instead of one in 20 people immediately paying up, one in three people do. That adds up to 150,000 occasions on which the bailiffs need not be called in.”

To the question of why on earth we need all these fuzzy experiments, Harford replies:

”There are a couple of reasons. The first is that human psychology is full of surprises. The report from the Cabinet Office contains no jaw-dropping discoveries but it does show that some sensible-sounding interventions have no effect, while others have very large effects. The second reason is that credible experiments tell a powerful story. I am told that the phone is ringing off the hook at the Behavioural Insight team office – government departments are queueing up to get some of that Nudgey goodness.”

Perhaps the Danish government could Swing about London if they too find it difficult to get trough on the phone at Cameron’s Nudge Unit?

This blog post was written by Christoph Burmester

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